Blackwell v Blackwell [2020] NSWSC 1208

Supreme Court New South Wales

Medium Neutral Citation: Blackwell v Blackwell [2020] NSWSC 1208 Hearing dates: 4 September 2020 Date of orders: 4 September 2020 Decision date: 04 September 2020 Jurisdiction: Equity Before: Parker J Decision: See [25] Catchwords: LAND LAW – Conveyancing Act 1919 (NSW), s 66G – application for appointment of trustees for sale Legislation Cited: Conveyancing Act 1919 (NSW), s 66G Cases Cited: Ferella v Official Trustee in Bankruptcy [2015] NSWCA 411 Forgeard v Shanahan (1994) 35 NSWLR 206 Category: Principal judgment Parties: Adam Thomas Blackwell (Plaintiff) Nathan John Blackwell (Defendant) Representation: Counsel: RE Raffell

Solicitors: RMB Lawyers File Number(s): 2020/5428 Publication restriction: Nil

Judgment – EX TEMPORE Revised from transcript; issued 7 September 2020 1. This case concerns a property at Helensburgh on the southern outskirts of Sydney. The property is co-owned by the plaintiff and the defendant. The plaintiff seeks orders for the property to be sold and the net proceeds divided between the parties. 2. The plaintiff is Adam Thomas Blackwell and the defendant is Nathan John Blackwell. They are brothers. The property is a semi-rural block of land at Walker Street, Helensburgh. I was told from the Bar Table that it is seven acres, or 2.8 hectares. There is a house on it. There are also demountable buildings, sheds or cottages, and stables. The land also includes paddocks which have been used for horse agistment. 3. The property was originally bought in 2001 by the plaintiff and the defendant and their brother Heath Blackwell in equal shares. In April 2007 the plaintiff and defendant bought their brother out. This left each of them holding a 50% share in the property as tenants in common. The buy-out was accompanied by a refinance of the loan which had been used to acquire the property initially. 4. The incoming bank was the Australia and New Zealand Banking Group Limited ("ANZ"). The bank loans were in the joint names of the plaintiff and the defendant, and were secured by a mortgage over the property. 5. After the buy-out the plaintiff and the defendant established a joint bank account with the ANZ. They carried out farming activities on the property and also leased part of it out. Income which resulted was paid into the joint account. Expenses, including mortgage repayments referable to the property, were paid out of the joint account. 6. The defendant has lived on the property since about 2008. In 2015 the relationship between the plaintiff and the defendant began to break down. The joint account went into overdraft in May 2015. The defendant has not contributed any further funds to the payment of expenses associated with the property through the joint account since that time. To the extent that the expenses have not been covered by income from the property, the plaintiff has made the necessary payments from his own funds. 7. In 2017 the plaintiff procured the defendant's agreement to repay the loan and discharge the mortgage. At that stage the outstanding balance under the joint loan was about $480,000. The plaintiff paid half of this and the defendant the other half. The plaintiff's half share came from a payment made by a company of which he is a director, the defendant's came from a payment made by a family trust of which he is a beneficiary. 8. Since that time the plaintiff has continued to pay for council rates and for insurance. The defendant has refused to take the steps necessary to have the mortgage taken off the title, so that it remains on the title even though the loan has been repaid. A caveat has also been lodged on the title by a former solicitor for fees allegedly owing to the solicitor by the defendant. 9. From about 2016 onwards further disputes arose between the plaintiff and the defendant, concerning the way in which the property was being used. According to the plaintiff, building materials and waste products were being stored there, in violation of the development approval governing the property. This led to difficulties with the local council. 10. The plaintiff first formally raised complaints with his brother in the form of solicitors' letters, which were sent in 2016. The plaintiff offered to buy his brother's half share of the property at a valuation to be determined by an independent valuer. These offers were rebuffed. In September 2019 the defendant sent the plaintiff some abusive and threatening text messages. This marked the final breakdown of their relationship. 11. This case began in January 2020. The plaintiff commenced proceedings by summons, but was subsequently directed to a file a statement of claim. Solicitors initially appeared on behalf of the defendant. Subsequently they withdrew from the proceedings. No defence has been filed. 12. When these proceedings were fixed for hearing the Registrar made a specific direction that the defendant be notified of the date and time for the hearing. The evidence before me shows that this direction was complied with, and that the defendant was aware that the hearing was taking place today. Indeed, shortly before the hearing was due to commence an email was received from the defendant's domestic partner. She said that the defendant had developed a respiratory condition and needed to be tested for Covid 19. She offered to come to Sydney to verify this. In response I had my Associate send a message, advising her that in the circumstances the Court would be prepared to allow her to participate in the hearing by telephone. But she did not take this up. 13. Initially counsel for the plaintiff sought equitable relief, including proprietary relief, based on there having been a partnership between the plaintiff and the defendant, or alternatively, on the basis of a common intention constructive trust. Ultimately these claims were not pressed, and counsel contented himself with seeking relief under the Conveyancing Act 1919 (NSW), s 66G. 14. The co-owner of a property who wishes to have it sold so as to release the value of his or her share is entitled to relief under s 66G virtually as of right: Ferella v Official Trustee in Bankruptcy [2015] NSWCA 411 at [36]. That entitlement may be displaced by some separate legal or equitable obligations, but there is nothing in the evidence before me which would suggest that there is any such restraint on the plaintiff in this case. I am satisfied that the plaintiff is entitled to a s 66G order. 15. The only complexity arises out of the payments the plaintiff has made since his brother stopped paying for a half share of the expenses associated with the property in 2015. At the hearing before me counsel for the plaintiff identified three categories of expense which, so he contended, gave rise to an entitlement to contributions from the defendant. These were, first, mortgage payments, second, council rates, and third, insurance premiums. 16. The evidence establishes clearly that the plaintiff is entitled to some allowance for at least some of these categories of expenditure. A practical issue arises as to how to deal with that. 17. I was presented with evidence of payments and supporting calculations, but it seems at least possible that further contributions will be necessary before the sale of the property is completed, and I assume that those will come from the plaintiff, as the trustees for sale will not have any ready funds. It will also be necessary in due course to give both parties an opportunity to consider the costs which the trustees incur and the remuneration which they seek and to resolve any disputes which may arise in that regard. 18. In these circumstances, I think it is best to leave the final determination of how much the plaintiff is entitled to by way of contribution until after the sale has taken place, so that all of the monetary issues can be dealt with at one time. What I will do is to direct the trustees to take an account of the relevant expenses, so that it can be presented to the Court when the sale has been completed, and the Court can then fix the amount due to the plaintiff and if appropriate order that it be paid out of the proceeds. 19. The scope of a co-owner's entitlement to contribution to expenses of the type under consideration in these proceedings was dealt with by the Court of Appeal in Forgeard v Shanahan (1994) 35 NSWLR 206. Meagher JA said (at 224): Apart from questions of improvements and occupation fees, which arise from the relationship of co-owners, it will also often happen that co-owners are joint debtors (for example, on a mortgage, or because rates are levied on the property). If one co-owner pays such a debt in full he is entitled to require the other co-owner to contribute a rateable amount; at least that is the prima facie position. In this regard the parties' rights arise from the equitable doctrine of contribution, not from the law of property (see Gibbs CJ in Muschinski v Dodds (1985) 160 CLR 583 at 596-597), that is, they would apply in the case of all joint debts even if the debtors owned no property. 1. On the facts of the case, one of the co-owners had paid for a range of expenses associated with the property. Meagher JA stated that the trial judge had been correct to make an allowance her favour for half of the mortgage payments and council rates. But he continued (at 225): [The trial judge] made no direct allowance for either the insurance or the pest control; and, again, I do not see why he should. They cannot be classified either as payments for improvements or payments of debts jointly owing. At most they are payments towards the maintenance of the property, and as such no allowance should be made in respect of them. 1. On this authority the plaintiff is clearly entitled to contribution for excess payments made in categories one and two, that is, mortgage repayments and council rates. Meagher JA did not allow contribution towards insurance. But as I read the decision that was because it did not represent a joint liability. 2. The evidence suggests that at least some of the insurance payments made by the plaintiff in this case may have been payments of joint liabilities. Of course a joint liability would not arise simply because insurance policy covered the interests of both the plaintiff and defendants as proprietors. But if it can be shown that the plaintiff and the defendant assumed a joint obligation as customers to pay for the insurance in question, then I think payments made by the plaintiff to discharge that joint liability would give rise to a right of contribution on the broad principle recognised in Forgeard v Shanahan. This question can be determined in due course by the trustees for sale when they take the account to which I have referred. 3. As to the costs of the proceedings, the evidence which I have recounted shows that the defendant's attitude required the plaintiff to take legal action. Some of the bases on which the plaintiff claimed release were not pressed, but it is perfectly clear that the plaintiff would have had to come to court even if those bases for relief had not been articulated. I will therefore make an order that the defendant pay the plaintiff's costs, rather than simply ordering that the costs come out of the sale of the property. 4. The sale may take some time and if there are any further proceedings they will involve distinct issues from the issues which have been debated today. I will therefore order that the plaintiff's costs may be assessed and enforced forthwith. 5. The orders of the Court are: 1. I order that: a. pursuant to section 66G of the Conveyancing Act 1919 (NSW) Liam Bailey and Christopher John Palmer of O'Brien Palmer ("the Trustees") be appointed as trustees for the sale of the Property; and b. the Property be vested in the Trustees subject to any incumbrances affecting the entirety of the lands but free from incumbrances (if any) affecting the undivided share or shares therein to be held by the Trustees upon statutory trust for sale under Division 6 of Part 4 of the Conveyancing Act 1919 (NSW). 2. I direct that the Trustees take an account of the respective payments made by the plaintiff and the defendant since 1 January 2015 by way of discharge of joint liabilities for: 1. mortgage repayments; 2. council rates; and 3. insurance premiums, together with interest at pre-judgment rates from the date of payment. 3. I direct that on completion of the sale of the property the Trustees pay the proceeds into Court and prepare a report to the Court detailing their expenses and the remuneration they seek, and including the account referred to in Order 2. 4. I grant the parties and the Trustees liberty to apply on 3 days' notice. 5. I adjourn the proceedings to the Registrar's List on 2 March 2021. 6. I order that the defendant pay the costs of the proceedings to date. 7. I direct that the costs may be assessed and made enforceable forthwith.